13. Dec 16

BGH: Advertising featuring incorrect reference price is misleading

Businesses are not allowed to promise consumers savings when advertising discounts if these savings do not actually exist. That was the verdict of the Bundesgerichtshof (BGH), Germany’s Federal Court of Justice (Az.: I ZR 31/15).

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: A pharmacy had promoted non-prescription medicinal products in a brochure with discounts. This detailed the amount saved as a percentage in addition to the lower price. However, a footnote clarified that the original price was the standard pharmacy price for the purposes of settling with the health insurance company. A competition association considered the advertising to be misleading and requested an injunction.

The Oberlandesgericht (OLG) Braunschweig [Higher Regional Court of Braunschweig] granted the claim, ruling that the advertising was misleading because the savings it referred to did not account for the 5 per cent discount to be granted by the pharmacies to the health insurance companies on prices quoted in the hidden schedule of charges. Consequently, the final selling price was presented as being lower than in the advertising. The Court went on to say that this gave consumers the impression they were saving more than was in fact the case. The BGH shared this view.

It held that the advertising was misleading and violated Germany’s Gesetz gegen den unlauteren Wettbewerb (UWG) [Unfair Competition Act], reasoning that the footnote was not part of the eye-catching aspect of the advertising and the saving specified was 5 per cent too high. This amounted to advertising a false reference price. As such, the price information featured in the advertising could not be said to be objectively accurate. Moreover, this deception of consumers was also said to be relevant from the perspective of competition law. Given the considerable importance of advertising savings on prices, the Court took the view that specifying a reference price that is inflated by 5 per cent would have a major impact on consumers’ decision to buy the product or not. The Karlsruhe judges noted that the fact that the discount for health insurance companies was only granted if payment was made within ten days and there was no way for customers to purchase the medicine at the price available to health insurance companies did not alter the misleading nature of the advertising.

Advertising can prove to be a bit of a tightrope walk, it being easy to unintentionally infringe competition law. The result may be damages claims or injunction suits. Lawyers who are versed in the field of competition law can assist businesses in fending off or enforcing claims arising from violations of competition law.

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